Introduction to Deep Technology Industry in Malaysia and Beyond

PERSPECTIVES

Introduction to Deep Technology Industry in Malaysia and Beyond

February 10, 2025

Overview of Deep Technology Industry

Deep technology (deep tech) is a term used to describe highly sophisticated technology rooted in advanced scientific principles and engineering innovations. Deep tech, also known as hard tech, builds on years of extensive research and development, as well as significant technical expertise, making it distinct from more mainstream or consumer-focused technology, otherwise known as shallow tech.

BCG defined deep technologies as the technologies of the future—the answers to significant global challenges like climate change, food shortages, and disease—in their report An Investor’s Guide to Deep Tech.

Diverse high-tech products based on recent breakthroughs in science and engineering make up what is known as the “deep tech” sector of the economy. These innovations often hold the key to complex problems and will have far-reaching social and economic effects. Research institutions, startups, existing firms, and investors all work together in the deep tech sector value chain to develop and sell these game-changing breakthroughs.

Deep-tech companies are often involved in fields like artificial intelligence, biotechnology, and quantum computing; this category also includes companies operating in agriculture, aerospace, green energy, mobility, and more. Some have become household names, like Moderna, Tesla, and Impossible Foods. Others are bringing into reality what was science fiction just a few years ago—SpaceX’s Starlink internet satellites, for example, or Boston Dynamics’ humanoid robots.

Regardless of the industries they are working in, deep-tech companies create products that tackle some of the most pressing challenges facing our species and planet today, including climate change, illness, and food insecurity. Investors have noticed: Deep Tech took in $40 billion worth of venture capital funding in the first half of 2023 and accounted for 20 percent of overall venture capital funding as of November 2023.

Based on global research conducted by Dealroom and BCG analysis, the cutting-edge technologies in demand were digital artificial intelligence (AI) and machine learning (ML) applications across industries, autonomous systems, advanced physics and chemistry, the Internet of Things (IoT), sensors, advanced materials and nanotechnology, next-generation interfaces, blockchain, factory automation, and quantum technology. The study highlighted how the technologies supported climate and sustainability, demographics, technology, and security, as stated in Exhibit 1.

Investment Trends in Deep Technology

Because of their potential for development and significance in the long run, venture capital firms are pouring more and more money into deep-tech enterprises. Venture capitalists are showing a lot of interest in cutting-edge solutions for the following business areas:

1. Mobility and logistics
2. Energy and climate
3. Agri-food
4. Physical cross-industry platform
5. Health and well-being
6. Cybersecurity, decentralised finance (DeFI), and legal tech;
7. Digital cross-industry platform
8. Space (aerospace and mobility); and
9. Defence

According to the findings, the most invested were in digital AI, autonomous systems, advanced physics, and chemistry. These technologies are the answers to areas of business, i.e., mobility and logistics, digital cross-industry platforms, and health and well-being.

Malaysian Deep Technology

To achieve its goal of becoming a knowledge-based economy with high incomes, Malaysia has fostered the expansion of deep technology companies. To encourage investment from outside and provide assistance to deep-tech businesses, the government has launched a number of programs. A couple of these initiatives are the National Technology and Innovation Sandbox (NTIS) and the Malaysia Digital Economy Blueprint, the former of which seeks to position Malaysia as a digital economy leader in the region by 2030.

One such venture capital firm that leads the country in deep tech investment in Malaysia is Malaysian Technology Development Corporation Sdn Bhd (MTDC). Starting with venture capitalists and then managing technology commercialization, the company has successfully produced 800 tech companies with various tech capabilities.

The recent companies listed on Bursa Malaysia, such as Greatech Technology Berhad, CPE Technology Berhad (CPE), and Cape EMS Berhad (Cape), have recorded a combined market capitalisation of RM8.44 billion.

Greatech uses cutting-edge automation solutions in various industries to increase their customers’ productivity levels, improve return on investment, and help customers channel their time and energy into more strategic assignments.

CPE specializes in delivering precision machining and mechanical sub-assemblies, encompassing CNC turning and milling, turn-milling, and final processes for sectors like health and science, consumer electronics, and semiconductors, among others.

Finally, Cape is an electronic manufacturing services (EMS) provider known for its expertise in producing and delivering electronic components and devices. They serve various industries, such as wireless communication devices, EV chargers, and life science equipment.

Other deep tech companies in the MTDC portfolios are as follows:

1. Spacein Sdn Bhd (Spacein) manufactures small satellites and provides satellite Internet of Things (IoT) services for agriculture, oil and gas, forest conservation, and fleet management applications.

1. Biogenes Technologies Sdn Bhd’s commercialised core technology is based on aptamers, which are synthetic antibodies that bind to specific target molecules such as proteins and biomarkers. Aptamers are used in a variety of applications, including human healthcare, animal breeding, agriculture, food safety and environmental monitoring.

1. Oncode Scientific Sdn Bhd leverages a variety of modern technologies in precision medicine, with a special emphasis on cancer molecular diagnostics.

The deep tech business has the potential to significantly assist innovation, global concerns, and new economic opportunities. If nations like Malaysia continue to invest and foster the development of deep-tech firms and ecosystems, we could see greater than expected developments in the coming years.